Trading Strategies

Pairs Trading

Definition

What is Pairs Trading?

A relative-value strategy that trades two historically related securities in opposite directions.

Example in practice

The trader buys one bank and shorts another after their valuation spread widens.

Keep learning

The tendency of assets with strong recent performance to continue outperforming for a period.

A persistent direction in price or market movement.

A pattern of generally rising prices, often marked by higher highs and higher lows.

The evaluation of economic, industry, company, and financial information to estimate an investment's value.

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